Series 79: Price/earnings–to–growth (PEG) Ratio

Taken from our FINRA Investment Banking Exam

Definition of the term Price/earnings–to–growth (PEG) Ratio...

a measure similar to the P/E ratio, but which accounts for the expected future growth of a company. Companies with high expected growth rates usually have higher P/E multiples than companies with lower expected growth rates, but the PEG ratio in theory removes expected growth as a factor.

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